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<== Previous message       Back to index       Next message ==>
Sender:
John Mee
Date:
Thu, 29 Jul 1999 12:45:41 +0000
Re:
Resulting trusts and fiction

 

In relation to Lionel's request for comment on the following passage:

Air Jamaica Ltd. v. Charlton [1999] 1 WLR 1399 (PC, Jamaica): pension scheme surplus: at 1412BC per Lord Millett: "Like a constructive trust, a resulting trust arises by operation of law, though unlike a constructive trust it gives effect to intention. But it arises whether or not the transferor intended to retain a beneficial interest - he almost always does not - since it responds to the absence of any intention on his part to pass a beneficial interest to the recipient."

My view is that Lord Millett's comments, although perhaps not very clearly expressed, are not particularly surprising or controversial. At first sight, as other members have argued, there does appear to be an unacceptable element of fiction in his formulation. However, it seems to me that Lord Millett had in mind two different "intentions" in the two sentences of the quote above.

In the second sentence, where Lord Millett says that the transferor "almost always does not" intend to retain a beneficial interest, he seems to be referring to what might (loosely) be called the transferor's primary intention. Resulting trusts frequently arise in situations where effect cannot be given to a person's primary intention e.g. where a trust fails for lack of certainty of objects or because it is contrary to public policy (or where a pension fund is discontinued prematurely, as in the Air Jamaica case). One then has to guess at the settlor's intention in the changed circumstances: given that the original intention cannot be put into effect, what would the settlor be likely to intend in the new situation? Would she want to retain the beneficial interest under a resulting trust or would she prefer e.g. the property to pass to the state as bona vacantia. The resulting trust option represents the most plausible guess as to the settlor's intention in the changed circumstances (and a rebuttable presumption is, in my view, not to criticised as arbitrary or fictional if it represents a sensible guess at a likely intention). In my view, it is in this sense that the resulting trust in the Air Jamaica case can be said to be based on the transferor's "intention" (as Lord Millett says in his first sentence above). I see no objectionable resort to fiction here.

A quick perusal of the rest of the Air Jamaica case appears to offer support for the above view. In discussing a clause of the Pension scheme that appeared to indicate that the company could not have intended to retain a share of the property in question, Lord Millett said:

"Consequently their Lordships think that clauses of this kind in a pension scheme should generally be construed as forbidding the repayment of contributions under the terms of the scheme, and not as a pre-emptive but misguided attempt to rebut a resulting trust which would arise dehors the scheme. The purpose of such clauses is to preclude any amendment that would allow repayment to the Company. Their Lordships thus construe clause 4 of the Trust Deed as invalidating the 1994 amendments, but not as preventing the Company from retaining a beneficial interest by way of a resulting trust in so much of the surplus as is attributable to its contributions."

This passage appears to be directed to showing that the company did not, in fact, have an intention (as to what should happen if the person fund were discontinued) which was inconsistent with the creation of a resulting trust.

 

John Mee


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" These messages are all © their authors. Nothing in them constitutes legal advice, to anyone, on any topic, least of all Restitution. Be warned that very few propositions in Restitution command universal agreement, and certainly not this one. Have a nice day! "


     
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